Manheim: Wholesale Prices Start Year Strong

By Jeffrey Bellant February 08, 2021
According to Cox Automotive estimates, total used vehicle sales were down 5 percent year-over-year in January. According to Cox Automotive estimates, total used vehicle sales were down 5 percent year-over-year in January.

Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 1.23 percent month-over-month in January, according to Manheim. This brought the Manheim Used Vehicle Value Index to 163.0, a 15.1 percent increase from a year ago.

Manheim Market Report (MMR) prices strengthened as the month progressed. The Three-Year-Old MMR Index, which represents the largest model year cohort at auction, increased 0.4 percent last week, bringing prices even with the start of the year. The increase last week was the strongest increase for that week of any year back to 2014. Over the month of January, MMR Retention, which is the average difference in price relative to current MMR, averaged 100.4 percent. The sales conversion rate increased for most of the month.

On a year-over-year basis, all major market segments saw seasonally adjusted price increases in January. Luxury cars and pickup trucks outperformed the overall market, while most other major segments underperformed the overall market.

Mixed retail results for vehicle sales. According to Cox Automotive estimates, total used vehicle sales were down 5 percent year-over-year in January. We estimate the January used SAAR to be 38.1 million, down from 40.1 million last January and flat compared to December’s 38 million rate. The January used retail SAAR estimate is 20.8 million, down from 21.2 million last year but slightly up month-over-month from December’s 20.2 million rate.

 

Manheim Used Value Index Jan. 2021

Manheim Used Value Index Jan. 2021

 

 

January 2021 vs. January 2020 

Using a rolling seven-day estimate of used retail days’ supply based on vAuto data, we see that used retail supply peaked at 115 days on April 8, 2020. Normal used retail supply is about 44 days’ supply. It ended January at 39 days, which is below normal levels. We estimate that wholesale supply peaked at 149 days on April 9, 2020, when normal supply is 23. It was down to 25 days by month end.

January total new vehicle sales were down 3.7 percent year-over-year, with one fewer selling day compared to January 2020. The January SAAR came in at 16.6 million, a decrease from last year’s 16.9 million but up from December’s 16.2 million rate.

 

Combined sales into large rental, commercial, and government buyers were down 26 percent year-over-year in January. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were up 3 percent year-over-year in January, leading to an estimated retail SAAR of 14.0 million, up from 13.3 million last January but down from December’s 14.1 million rate.

New vehicle inventories came in around 2.8 million units, which was down 21 percent from January 2020.

Price Changes For Selective Market Classes- Year after year % change Jan. 2021

Rental risk pricing improves. The average price for rental risk units sold at auction in January was up 8 percent year-over-year. Rental risk prices were up 3 percent compared to December. Average mileage for rental risk units in January (at 49,900 miles) was down 3 percent compared to a year ago and down 4 percent month-over-month.

Coronavirus uncertainty led to lower spending in the winter. The first estimate of the fourth-quarter real GDP increase came in at 4.0 percent (annualized), which was less than the 4.2 percent expected. The increase followed a 33.4 percent increase in the third quarter, which was the biggest quarterly increase in the history of the quarterly GDP data. Personal consumption increased 2.5 percent, which was down from 41 percent growth in the prior quarter and was less than the 3.1 percent growth expected. Spending on goods declined 0.4 percent, while spending on services increased 4 percent. With the growth, real GDP was down 2.5 percent year-over-year. Based on the initial estimate for the final quarter, GDP declined 3.5 percent in 2020, which was the worst annual performance since 1948. Pending and new home sales, which are based on new contracts signed, moved slightly in different directions in December. The pending home sales index declined 0.3 percent. New home sales increased 1.6 percent.

Consumer Confidence according to the Conference Board increased 2.5 percent in January and left confidence down 32 percent year-over-year and down 33 percent from February. Plans to purchase a vehicle in the next six months increased in January from December but was down year-over-year.

 

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Last modified on Monday, 08 February 2021 14:53